Top 5 Advantages of a Subscription Business Model

By Veronika Tondon

A subscription business model offers a host of advantages. It creates economies, retains customers and simplifies a lot of business processes making them easier in the long run.The model offers convenience to customers and saves on a lot of their time and effort.

Here are some key advantages for opting for such a model:

Simplicity

A subscription model simplifies the business process and makes it very easy for both consumers and the business. In this model, the consumers do not have to make a repeated purchase every month and the the business does not have to solicit any orders from existing customers. This adds to the productivity of the business, since the time and effort required in order generation is saved. The goods and services are delivered to the customer as and when they are required. The customer knows the payable amount in advance and this enables them to plan their budget well. The revenue predictability of the business also increases and the business can gauge where it’s headed.

Higher Customer Retention

A subscription model ensures that the business is retaining a larger number of customers on a consistent basis. The model gives an opportunity to get upgradations and increased revenue opportunities from the existing customers. Knowing the customers for a long period of time and solving their queries helps in coming up with solutions more suitable for the business. Since the scope of value addition stays throughout the customer lifecycle, the business gets consistent opportunities in growing the revenue.

Opportunities For Marketing

The business model ensures that the clients can be reached out to and engaged with on a regular basis. E-mail campaigns ensure upselling and cross selling opportunities.Knowing preferences and usage behaviours of customers regularly helps business strategise their social and content marketing campaigns accordingly. Getting testimonials of regular subscribers and adding them to the website helps improve the business image and gain more customers for the business.

Business Consistency

A business model like this helps in anticipating demand and supply with ease. This helps in achieving consistency in business processes. Adequate levels of inventory can be managed and planned for, well in advance. The appropriate vendors for product delivery and other services can be hired in advance, saving time, effort and costs. With effective planning, production and employee costs can also be saved, with this model.

Better Cash Flow Management

A subscription business model offers much higher payment safety for your business. It helps in realising automatic online transactions to receive regular payments for the products and services sold. This ensures not just regularity of business but also the cash being generated from it. The model provides overall stability to the business. It can opt for an appropriate subscription billing software and use late payment reminders to get the clients to pay up on time. Online payment gateways help in getting automated recurring payments. This helps in doing away with the time and effort involved in payment follow ups.

A model that helps you get subscriptions for your business provides a host of opportunities for faster business growth. The model does not just mean regular business but also adds to the stability with consistent flow of cash. It allows for better and consistent ROI on the marketing efforts through regular customer engagement.

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